Shell could abandon Arctic after this season


#241

[QUOTE=Drill Bill;192633]well, it will be the last thing that any offshore or drilling related vessel will have done up there. At least for quite a while:

Obama rescinds Arctic offshore drilling proposal

The end.[/QUOTE]

pretty much all meaningless now. the fracking revolution has rendered offshore Arctic energy simply too expensive to recover for the foreseeable future and even though there might still be massive plays in the Chukchi Sea, no major will have any interest in spending the massive quantities of cash to explore for them as long as the world is finding more than enough oil and gas from far lower cost provinces.

even the GoM with its huge already developed infrastructure will have a hard time competing with “cheap oil” even when the price of crude recovers to over $80/bbl. I expect lackluster effort there for at least a decade to come now. We have past the two year mark on yet another oil bust just like in the 80’s. I am shocked that after two years no major company has fallen on its face. Certainly in 2017 somebody will go starting with Tidewater. There will also be at least one driller to go belly up. It simply must happen.

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#242

[QUOTE=Fraqrat;192548]Well we can all go work in some capacity in the land drilling sector since you’re so hellbent on building drone ships to put us all out of work[/QUOTE]

Forget it. Land based rigs will also be autonomous and human beings won’t be allowed anywhere near them.


#243

Well damn…ok plan B is to get a job at anyone of these fine establishments.

Maybe take a year or two off and fight the man. Show up and riot I mean protest with out having a clear idea of what’s going on.


#244

[QUOTE=Fraqrat;192646]Well damn…ok plan B is to get a job at anyone of these fine establishments.

Maybe take a year or two off and fight the man. Show up and riot I mean protest with out having a clear idea of what’s going on.[/QUOTE]

no need to fight “the Man”…Sargent Stedanko’s nowhere in sight way out here on the Commie Leaning Left Coast. last I heard, we has taking a job with the Feds to round up illegals in Lower Bama and send them to concentration camps before shipping them back to Mexico in cattle cars

I mean toke on bruddah and be mellow but don’t smoke none of that Labrador…tastes just like dogshit!

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#245

“THE LOOTERS HAVE ENTERED THE PACKAGE STORE, I REPEAT THE LOOTERS HAVE ENTERED THE PACKAGE STORE!!!”


#246

Arctic could be the salvation for US Shipbuilding: http://fuelfix.com/blog/2016/11/18/commentary-arctic-energy-could-boost-maritime-industry/


#247

The big oil find on the North Slope in Alaska has just got much bigger: https://www.adn.com/business-economy/energy/2017/03/09/a-north-slope-oil-discovery-already-described-as-huge-just-got-a-lot-bigger/

Will it be developed?? If so, how long before first oil?

How will it be taken to market? With global warming it MAY be possible to ship it out in ice strengthened Shuttle tankers from an offshore loading facility near by.
The Russians are doing it: http://www.arcticinfo.eu/en/features/86-oil-and-gas-transportation-systems-in-the-russian-arctic


#248

[QUOTE=ombugge;196052]With global warming it MAY be possible to ship it out in ice strengthened Shuttle tankers from an offshore loading facility near by.[/QUOTE]

Varandey, Prirazlomnoye, Sabetta and Novy Port have proven that year-round transportation is technically possible - in case of the first two even without nuclear-powered icebreakers - but with the current oil prices it’s more a question of money: is it worth it?

Also, some American mariners would likely complain because the ships wouldn’t have steam turbines… :wink:


#249

[QUOTE=Tups;196056]Also, some American mariners would likely complain because the ships wouldn’t have steam turbines… ;)[/QUOTE]

Sorry, this was out of line after the Death of 33 souls, 28 U.S Merchant Mariners and 5 Polish Workers!

Tubs, I usually look forward to your informative posts but as I said this crossed a very big line and you should delete it! :mad:


#250

[QUOTE=ombugge;196052]How will it be taken to market? With global warming it MAY be possible to ship it out in ice strengthened Shuttle tankers from an offshore loading facility near by. [/QUOTE]

what kind of nonsense is this? this is not an offshore find…it will be developed and oil exported via a pipeline tied back to the TAPS

even IF Shell had found a huge pool of crude in the Chukchi Sea it would have been also exported via a subsea pipeline the same way albeit, that pipeline would have been extremely expensive to install hence why Shell ran away very fast when they found very little crude in 2015.


#251

[QUOTE=c.captain;196062]what kind of nonsense is this? this is not an offshore find…it will be developed and oil exported via a pipeline tied back to the TAPS

even IF Shell had found a huge pool of crude in the Chukchi Sea it would have been also exported via a subsea pipeline the same way albeit, that pipeline would have been extremely expensive to install hence why Shell ran away very fast when they found very little crude in 2015.[/QUOTE]

There are pipelines from the Siberian Gas fields to markets in Europe. yet it is found economically viable to build an LNG plant and some VERY expensive VLNGs to carry the product directly to destinations in the Far East, or anywhere else in the world.

Crude oil may be easier to find market for in it’s original form. Existing pipeline from the North Slope (TAPS) may make that solution more viable than direct tanker loading at an offshore loading facility.
Reduced production from existing fields should ensure capacity to handle the extra Crude oil.

Yes I know that the new oil field is onshore. But it is close by a coastline that is ice free part of the year, making it feasible to place storage and loading facilities a short distance from the source. Shallow waters make it more practical to place the loading facility offshore, rather than building a port with sufficient depth to handle VLCCs.


#252

The TAPS pipeline is running at a small fraction of its peak volume some years ago. At its peak the North Slope was producing 25 percent of US oil production. TAPS needs more oil flow to help pay for the necessary pipeline maintenance and operating cost. The oil from the new North Slope find by Repsol and Armstrong is expected to produce 120,000 bbl a day. It will all flow through the TAPS pipeline to ice free Valdez.


#253

[QUOTE=tugsailor;196091]The TAPS pipeline is running at a small fraction of its peak volume some years ago. At its peak the North Slope was producing 25 percent of US oil production. TAPS needs more oil flow to help pay for the necessary pipeline maintenance and operating cost. The oil from the new North Slope find by Repsol and Armstrong is expected to produce 120,000 bbl a day. It will all flow through the TAPS pipeline to ice free Valdez.[/QUOTE]

That was the old estimate. Now that the field has been extended and more than dobled in estimated reserve, thes plans may change.

Now, with Repsol saying the play is known to extend to the south, additional production beyond the original estimate can be expected to increase from the 2015 estimates. The Horseshoe wells were about 12 miles south of Nuiqsut.


#254

The TAPS pipeline is 48" diameter and 800 miles long. It has a capacity of 2 million barrels per day. The current flow rate is about 25 percent of that, or 500,000 bbl/day.

The minimum flow necessary to operate the pipeline is disputed. Some say that a flow rate of 350,000 bbl/day is required to operate the pipeline. Others suggest that it is theoretically possible, with various technologies, to reduce minimum flow to 70,000 bbl/day.

The pipeline currently has excess available capacity of about 1.5 million bbl/day.


#255

[QUOTE=Tugs;196061]Sorry, this was out of line after the Death of 33 souls, 28 U.S Merchant Mariners and 5 Polish Workers!

Tubs, I usually look forward to your informative posts but as I said this crossed a very big line and you should delete it! :mad:[/QUOTE]

I was not referring to the El Faro disaster.

However, pretty much every time I come across a steam turbine powered merchant ship other than an LNG tanker, it’s still sailing or at least sailed until very recently under the US flag, which I find rather curious considering how uncommon such ships have been in Europe during my lifetime. Of course, it’s not always the mariners’ fault that the shipowners stick to their old tonnage which elsewhere would have been scrapped, but in gCaptain I have also felt a general resistance among seafarers against new technology. Finally, year-round shipping from ice-covered waters using an ice-resistant loading tower and ice-capable tankers requires propulsion systems and operating methods which, despite having been in successful year-round service in the Russian Arctic since 2006, are relatively recent invention. For sure, Canadians have shown that it’s possible to operate ice-going tonnage with more conventional propulsion (low-speed diesel, mechanical drivetrain, controllable pitch propeller in a nozzle), but that’s not suitable for a transportation system which relies on the ships coming and going according to a more or less fixed schedule due to limited storage capacity of the shipped product (oil or gas, that is, as opposed to ore that can be stored outdoors in piles).

Also, now that you brought the issue up, it has been one and a half years since the El Faro sank. While I don’t mean we should start joking about the disaster or, even worse, just quietly forget it, not every remark made towards issues that may (or may not) have been a factor in the accident is a direct reference to that particular ship, its crew and its fate.


#256

I believe one of the first attempts at shipping Crude oil from the American Arctic was by the US flag Ludwig owned tanker Manhattan, which was a very basic vessel, except for an ice strengthened bow. No sophisticated equipment, just plain 1960s technology with steam turbine driven machinery, fixed propeller and conventional rudder.

As to shuttle tankers loading at offshore loading facilities; this is also old hat, with the early such operations commencing in the North Sea in the 1970’s . The tankers used has increased in size and sophistication since then, but as a gradual process, until today’s 150,000 DWT/DP 2 Shuttle tankers used many places in the world, incl. in the Arctic.

The American development of this technology may have stopped with that one trip by the Manhattan, but the Norwegians and Russians have continued improving the equipment and operational experience since then.

PS> American built tankers were popular for conversion to FPSOs in the early 2000’s. They were “built like a brick shithouse” and had Steam turbines, which didn’t weigh much and was easy to demobilize (As long as you remembered to blank off the scoop intake, that is)


#257

Speaking of SS Manhattan, here’s a paragraph from the book “United States Arctic Interests: the 1980s and 1990s”:

One possible measure of the changing United States perception of its stake in the Arctic is the improving quality of its icebreakers. In 1969 the escort icebreaker Northwind accompanied the Manhattan on its historic Northwest Passage voyage. The supertanker outperformed both the Northwind and the accompanying Canadian icebreaker, the John A. Macdonald, but the American icebreaker proved to be wholly inadequate in its supporting role. The Northwind actually became a liability to the test objectives of the Manhattan since it couldn’t keep up and eventually had to drop out as an escort.

Correct me if I’m wrong, but aren’t all Norwegian offshore loading terminals located in places where they don’t have to worry about sea ice? That’s quite a different operating environment from Varandey, Prirazlomnoye, Novy Port and even De-Kastri in Sakhalin. I don’t have any data at hand, but I would expect offshore Alaska being a more challenging operating environment than, say, the North Sea. Since the oil terminal would be less sheltered than, say, Novy Port in the Gulf of Ob and there’s a possibility of multi-year ice drifting to the coast, I’d expect the loading facility to look more like the Varandey FOIROT…


#258

it’s like I wrote this myself

[B]Hurdles abound to tap major Alaska offshore oil discovery[/B]

By Bloomberg News on March 16, 2017


A Caelus rig in Smith Bay, Alaska. Caelus Energy photo.

(Bloomberg) — It’s hard to tell where the world ends here on the Alaska North Slope.

In the subzero twilight, when the Arctic winds snarl, snow and cloud stretch to every horizon in a seamless vault of spectral white. Beyond the tundra, five miles out on the frozen sea, oil workers from a tiny outfit called Caelus Energy have welded the drilling rig shut against trespassing polar bears.

“Spooky,” one of them says into the whiteness, and he’s right. The North Slope in February is beautifully, impossibly spooky.

This is where Jim Musselman hopes to save Alaska, or at least make a fortune trying.

In a shallow estuary called Smith Bay, Musselman’s flyspeck company will work to extract an astonishing 6 billion barrels of crude. The nearby tundra, Caelus says, could yield 4 billion more.

If Musselman is right — if he can actually make this happen — it would be nothing short of a miracle. Everyone in the state knows firsthand that the fracking revolution in the Lower 48 has crushed Alaskan oil, that ‘70s-era answer to OPEC. Four decades after the Trans Alaska Pipeline System went live, transforming the North Slope into a modern-day Klondike, many Alaskans fear the best days have passed. Jobs have vanished. The budget in Juneau is a disaster.

And all of this, every last painful bit, comes down to oil, the state’s lifeblood. Hard economics are slowly rendering the Trans-Alaska obsolete. The great pipeline, and the money, are running low.

Which is why everyone from the governor down hopes Musselman can somehow pull this off.

“With an oil pipeline that is three-quarters empty, this is good news,” Governor Bill Walker said when word came of the Smith Bay find.

Good news, yes. But also a monumental challenge, and a monumentally expensive one. The closest pipeline is 125 frozen miles away. Linking up would cost roughly $800 million, Musselman says. That’s the cheap part. Actual production could run $10 billion over a decade. Even Musselman, a Texas oilman with a record of big discoveries, might have trouble raising that kind of money.

David Houseknecht, a senior research geologist at the U.S. Geological Survey, says the Smith Bay discovery seems to have incredible potential. Then he adds: “But it’s the last one you’d want to bet your retirement money on.”

Even in the winter white-out, work never stops on the North Slope. On this mid-February day, BP Plc workers are plowing snow, fixing pipes and laying ice roads as the temperature falls to 30 below. An archipelago of brightly lit pump stations, drilling rigs and work camps spreads for miles.


Caelus Energy CEO Jim Musselman.

Musselman, 69, dreams of turning Smith Bay into a rival to Prudhoe Bay, 150 miles to the east, where the Trans Alaska starts its 800-mile journey southward. Mega-major BP rules Prudhoe Bay. Caelus, by comparison, has 100 employees.

But no one searches for oil in Alaska unless he’s prepared to be lucky. “North to the Future” — that’s the state motto. When the oilmen came to this last great U.S. wilderness, they transformed it into a mini petro-state. Not even the 1989 Exxon Valdez spill, which blackened 1,300 miles of coastline, could cool the oil lust. Every Alaskan gets a cut just for living here. For decades now, the state oil wealth fund has paid each resident an annual dividend.

But in a world of fracking and lower-for-longer oil prices, why bother with Alaska? Big Oil has largely abandoned plans for the North Slope. Last year, a mere 515,000 barrels flowed through the Trans Alaska, roughly a quarter of the volume three decades ago. Walker cut Alaskans’ dividend checks at $1,000, half what they used to be.

What is Jim Musselman thinking? The answer, here in the frozen north, is elephants.

Elephants: that’s what people in the oil game call huge finds. A painting of a herd covers an entire wall of Musselman’s office in Dallas. Maps of all sorts — Victorian London, Viking sea routes, the Roman Empire — dot the cherry paneling.

“I’ve always been fascinated by the early maps, by the spirit of people that didn’t know what was there and would just strike out across the ocean,” Musselman says. He has maps of the North Slope, too, big enough to wallpaper the room.

Musselman is a fourth-generation Texan who grew up on a ranch half the size of Manhattan. He bagged his first elephant in 1999, off the coast of West Africa, and eventually sold his company to Hess Corp. for $3.2 billion. Then, in 2007, he caught another big one, off the coast of Ghana.

Exxon Mobil Corp. offered Musselman $4 billion for the stake in the elephant that was owned by his company, Kosmos Energy, but Ghana blocked the sale in a dispute over royalties. Musselman made plans to take Kosmos public, even as the company became embroiled in a local bribery scandal. Even though investigators found no wrongdoing, Musselman was forced out, four months shy of the initial public offering. He left with shares worth tens of millions of dollars.

Unbowed, Musselman established Caelus, named for the Roman sky god. Apollo Global Management, the private equity giant, agreed to invest as much as $1 billion.

“Jim’s a visionary who’s had rare, repeated successes in discovering billions of barrels of oil in some of the world’s most challenging environments,” said Greg Beard, an Apollo senior partner.

Now Musselman has caught an elephant in Alaska. He just has to figure out how to get all that oil out of the ground and over to the Trans Alaska Pipeline. The shortest route runs through the pristine wildness near Teshekpuk Lake, home to caribou and polar bears. One tricky alternative would be running an undersea pipeline along the coastline, which is eroding because of climate change. Another would be to snake the pipeline somewhere else, away from Teshekpuk Lake.

Whichever way he goes, Musselman needs money first. He says he could take Caelus public or find a merger partner. Or he could simply “turn the keys over” to a bigger company. All of those would have been easier a few years ago, when oil prices were higher and Alaska was handing out generous tax breaks to the industry.

Musselman, in his gravely Texas drawl, told Forbes last year that Walker, the governor, “stuck his shiv in us.” Alaska, Musselman complained, had done an about-face on the tax breaks that helped make Alaskan oil profitable. Walker, an Independent elected in 2014, said Alaska could no longer afford such largesse. He suspended $430 million of tax breaks and took the politically risky step of reducing dividend payments to residents.

Walker says he had little choice. “It would be a little unusual if they were not part of that discussion,” the governor says of the oil companies. He’s promising to help drillers in other ways, such as supporting expanded North Slope processing and building roads to open up more of the area for development.

Musselman tries to be diplomatic about it. Caelus had $100 million of tax breaks frozen. That’s enough to make a difference, given his dreams for Smith Bay. He acknowledges Walker faces an “impossible” fiscal situation, but says he is confident Alaska will make good eventually.

Last week, Spain’s Repsol SA announced a 1.2 billion barrel discovery west of Prudhoe Bay, and Conoco greenlit three new fields in the past year. Still, the scrape over taxes is scaring off some would-be investors just as new discoveries are being made, says Paul Basinski, CEO at Houston-based Burgundy Xploration, another explorer prospecting in the north.

“Every one of them is concerned,” Basinski says of the investors he’s approached. “If there was more certainty there, funding would be a lot easier.”

Plenty of small explorers like Caelus are sniffing around Alaska these days, but Big Oil is still king. Giants like ConocoPhillips, Exxon and BP, the North Slope’s top producers, have the wherewithal to shoulder the high capital costs. But even for these giants, Alaskan oil is still a tough call. Costs vary, but the state estimates that it takes $50 on average to produce a barrel of North Slope oil and move it to market. At current prices, Alaskan oil barely breaks even.

“People are worried about the future,” says Janet Weiss, president of BP’s Alaska division. “It’s a lower-for-longer world, and we’ve got to find a way to adapt to that.”

Back at Smith Bay, Caelus plans to drill a $100 million test well to help determine how much oil can be pumped. To find a buyer or partner, Musselman knows he has to take into account the lower-for-longer reality. He also knows he can’t bring Smith Bay oil to market alone. But he’s never been a corporate guy anyway. He’s an elephant hunter.

“I don’t think I’m any smarter than a lot of people in this business,” Musselman says. “I just have enough stupid confidence where I think that I can find things that no one else can.”

the saddest reality is that there are still many tens of billions of barrels of crude to be produced from the Alaskan Arctic but it really won’t be profitable to do so until all the other sources of much lower cost to produce crude play out and who knows how many decades that will be? I really believe now that I will be dead before the true bonanza in the north happens. Someday though it is going to be something far bigger than any of us have ever experienced. It’s a pity because I always believed that was my ultimate destiny to be a part of that “big show”.


#259

[QUOTE=Tups;196141]Speaking of SS Manhattan, here’s a paragraph from the book “United States Arctic Interests: the 1980s and 1990s”:

One possible measure of the changing United States perception of its stake in the Arctic is the improving quality of its icebreakers. In 1969 the escort icebreaker Northwind accompanied the Manhattan on its historic Northwest Passage voyage. The supertanker outperformed both the Northwind and the accompanying Canadian icebreaker, the John A. Macdonald, but the American icebreaker proved to be wholly inadequate in its supporting role. The Northwind actually became a liability to the test objectives of the Manhattan since it couldn’t keep up and eventually had to drop out as an escort.

Correct me if I’m wrong, but aren’t all Norwegian offshore loading terminals located in places where they don’t have to worry about sea ice? That’s quite a different operating environment from Varandey, Prirazlomnoye, Novy Port and even De-Kastri in Sakhalin. I don’t have any data at hand, but I would expect offshore Alaska being a more challenging operating environment than, say, the North Sea. Since the oil terminal would be less sheltered than, say, Novy Port in the Gulf of Ob and there’s a possibility of multi-year ice drifting to the coast, I’d expect the loading facility to look more like the Varandey FOIROT…[/QUOTE]

Yes the Offshore Loading Terminals in Norwegian waters are all ice free, but totally exposed to some of the worst weather anywhere. incl. off the coast of Finnmark, which is well into the Arctic.

My point was that the Norwegians developed the vessel technology to allow loading operations in much worse weather than in the early days and the Russians the ability to carry out such operations in ice covered waters. (With input from Finnish and Norwegian technology)

I don’t know how much multi-year ice reach the coast of Alaska these days, but it is likely to be less and less, with periods of ice free waters getting longer and longer.

In any case, both the vessel technology and ice handling technology available from existing operations would be valuable to any US development off Alaska.


#260

There isn’t any multiyear ice in Alaska.